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Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
_____________________________________
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 29, 2023
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
          
For the transition period from              to             
Commission file number 001-39940 
_____________________________________
imagelogoa.jpg
CISCO SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0059951
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification Number)
170 West Tasman Drive
San Jose, California 95134
(Address of principal executive office and zip code)
(408) 526-4000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and formal fiscal year, if changed since last report.)
_____________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareCSCOThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒   No  ☐  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒    No  ☐  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer ☐
Non-accelerated filer☐Smaller reporting company ☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐  No  ☒
Number of shares of the registrant’s common stock outstanding as of May 18, 2023: 4,075,058,155
____________________________________ 
1
Table of Contents
Cisco Systems, Inc.
Form 10-Q for the Quarter Ended April 29, 2023
INDEX
Page
Part I
Item 1.
Item 2.
Item 3.
Item 4.
Part II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

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PART I. FINANCIAL INFORMATION 
Item 1.Financial Statements (Unaudited)
CISCO SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except par value)
(Unaudited)
April 29, 2023July 30, 2022
ASSETS
Current assets:
Cash and cash equivalents$8,044 $7,079 
Investments15,244 12,188 
Accounts receivable, net of allowance of $83 as of each of April 29, 2023 and July 30, 2022
5,104 6,622 
Inventories3,474 2,568 
Financing receivables, net3,402 3,905 
Other current assets4,682 4,355 
Total current assets39,950 36,717 
Property and equipment, net2,047 1,997 
Financing receivables, net3,393 4,009 
Goodwill38,369 38,304 
Purchased intangible assets, net1,966 2,569 
Deferred tax assets5,817 4,449 
Other assets5,987 5,957 
TOTAL ASSETS$97,529 $94,002 
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt$1,731 $1,099 
Accounts payable2,442 2,281 
Income taxes payable3,132 961 
Accrued compensation3,352 3,316 
Deferred revenue13,249 12,784 
Other current liabilities4,813 5,199 
Total current liabilities28,719 25,640 
Long-term debt6,663 8,416 
Income taxes payable6,725 7,725 
Deferred revenue11,011 10,480 
Other long-term liabilities2,116 1,968 
Total liabilities55,234 54,229 
Commitments and contingencies (Note 14)
Equity:
Cisco stockholders’ equity:
Preferred stock, $0.001 par value: 5 shares authorized; none issued and outstanding
— — 
Common stock and additional paid-in capital, $0.001 par value: 20,000 shares authorized; 4,075 and 4,110 shares issued and outstanding at April 29, 2023 and July 30, 2022, respectively
43,639 42,714 
Retained earnings (Accumulated deficit)262 (1,319)
Accumulated other comprehensive loss(1,606)(1,622)
Total equity42,295 39,773 
TOTAL LIABILITIES AND EQUITY$97,529 $94,002 
See Notes to Consolidated Financial Statements.
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CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per-share amounts)
(Unaudited) 
Three Months EndedNine Months Ended
April 29, 2023April 30, 2022April 29, 2023April 30, 2022
REVENUE:
Product$11,092 $9,448 $31,492 $28,330 
Service3,479 3,387 10,303 10,125 
Total revenue14,571 12,835 41,795 38,455 
COST OF SALES:
Product4,136 3,606 12,353 10,848 
Service1,203 1,108 3,437 3,384 
Total cost of sales5,339 4,714 15,790 14,232 
GROSS MARGIN9,232 8,121 26,005 24,223 
OPERATING EXPENSES:
Research and development1,962 1,708 5,598 5,092 
Sales and marketing2,526 2,209 7,301 6,736 
General and administrative641 517 1,788 1,612 
Amortization of purchased intangible assets70 77 212 240 
Restructuring and other charges87 — 328 8 
Total operating expenses5,286 4,511 15,227 13,688 
OPERATING INCOME3,946 3,610 10,778 10,535 
Interest income262 115 650 347 
Interest expense(109)(90)(316)(267)
Other income (loss), net(142)166 (265)446 
Interest and other income (loss), net11 191 69 526 
INCOME BEFORE PROVISION FOR INCOME TAXES3,957 3,801 10,847 11,061 
Provision for income taxes745 757 2,192 2,064 
NET INCOME$3,212 $3,044 $8,655 $8,997 
Net income per share:
Basic$0.79 $0.73 $2.11 $2.15 
Diluted$0.78 $0.73 $2.11 $2.14 
Shares used in per-share calculation:
Basic4,089 4,152 4,100 4,184 
Diluted4,110 4,170 4,111 4,204 
See Notes to Consolidated Financial Statements.
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CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
Three Months EndedNine Months Ended
April 29, 2023April 30, 2022April 29, 2023April 30, 2022
Net income$3,212 $3,044 $8,655 $8,997 
Available-for-sale investments:
Change in net unrealized gains and losses, net of tax benefit (expense) of $(1) and $11 for the third quarter and first nine months of fiscal 2023, respectively, and $45 and $120 for the corresponding periods of fiscal 2022, respectively
36 (376)(28)(597)
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $(2) and $(3) for the third quarter and first nine months of fiscal 2023, respectively, and $2 and $7 for the corresponding periods of fiscal 2022, respectively
4 — 12 (11)
40 (376)(16)(608)
Cash flow hedging instruments:
Change in unrealized gains and losses, net of tax benefit (expense) of $(4) and $(1) for the third quarter and first nine months of fiscal 2023, respectively, and $(10) and $(14) for the corresponding periods of fiscal 2022, respectively
13 35 4 49 
Net (gains) losses reclassified into earnings, net of tax (benefit) expense of $3 and $12 for the third quarter and first nine months of fiscal 2023, respectively, and $2 and $3 for the corresponding periods of fiscal 2022, respectively
(10)(10)(38)(12)
3 25 (34)37 
Net change in cumulative translation adjustment and actuarial gains and losses net of tax benefit (expense) of $0 and $24 for the third quarter and first nine months of fiscal 2023, respectively, and $0 and $9 for the corresponding periods of fiscal 2022, respectively
(63)(323)66 (475)
Other comprehensive income (loss)(20)(674)16 (1,046)
Comprehensive income$3,192 $2,370 $8,671 $7,951 
See Notes to Consolidated Financial Statements.


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CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Nine Months Ended
April 29, 2023April 30, 2022
Cash flows from operating activities:
Net income$8,655 $8,997 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other1,304 1,527 
Share-based compensation expense1,720 1,407 
Provision (benefit) for receivables11 49 
Deferred income taxes(1,343)(167)
(Gains) losses on divestitures, investments and other, net243 (470)
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable1,494 (134)
Inventories(894)(683)
Financing receivables1,126 1,431 
Other assets(428)(1,295)
Accounts payable156 (54)
Income taxes, net1,120 (730)
Accrued compensation25 (730)
Deferred revenue1,055 292 
Other liabilities(324)109 
Net cash provided by operating activities13,920 9,549 
Cash flows from investing activities:
Purchases of investments(7,652)(5,383)
Proceeds from sales of investments802 2,488 
Proceeds from maturities of investments3,789 4,308 
Acquisitions, net of cash and cash equivalents acquired and divestitures(96)(373)
Purchases of investments in privately held companies(162)(158)
Return of investments in privately held companies72 149 
Acquisition of property and equipment(616)(338)
Proceeds from sales of property and equipment2 6 
Other(26)(15)
Net cash provided by (used in) investing activities(3,887)684 
Cash flows from financing activities:
Issuances of common stock316 306 
Repurchases of common stock—repurchase program
(3,029)(5,347)
Shares repurchased for tax withholdings on vesting of restricted stock units(444)(546)
Short-term borrowings, original maturities of 90 days or less, net(602)9 
Issuances of debt— 1,049 
Repayments of debt(500)(3,050)
Dividends paid(4,713)(4,657)
Other(4)(108)
Net cash used in financing activities(8,976)(12,344)
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents(90)(122)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents967 (2,233)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period8,579 9,942 
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period$9,546 $7,709 
Supplemental cash flow information:
Cash paid for interest$306 $292 
Cash paid for income taxes, net$2,414 $2,960 


See Notes to Consolidated Financial Statements.
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CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(in millions, except per-share amounts)
(Unaudited)
Three Months Ended April 29, 2023Shares of
Common
Stock		Common Stock
and
Additional
Paid-In Capital		Retained Earnings (Accumulated Deficit)Accumulated
Other
Comprehensive Loss		Total
Equity
Balance at January 28, 20234,095 $43,424 $(364)$(1,586)$41,474 
Net income3,212 3,212 
Other comprehensive loss(20)(20)
Issuance of common stock8 — 
Repurchase of common stock(25)(270)(989)(1,259)
Shares repurchased for tax withholdings on vesting of restricted stock units and other(3)(139)(139)
Cash dividends declared ($0.39 per common share)
(1,593)(1,593)
Share-based compensation623 623 
Other1 (4)(3)
Balance at April 29, 20234,075$43,639 $262 $(1,606)$42,295 

Nine Months Ended April 29, 2023Shares of
Common
Stock		Common Stock
and
Additional
Paid-In Capital		Retained Earnings (Accumulated Deficit)Accumulated
Other
Comprehensive Loss		Total
Equity
Balance at July 30, 20224,110 $42,714 $(1,319)$(1,622)$39,773 
Net income8,655 8,655 
Other comprehensive income16 16 
Issuance of common stock38 316 316 
Repurchase of common stock(63)(664)(2,353)(3,017)
Shares repurchased for tax withholdings on vesting of restricted stock units and other(10)(449)(449)
Cash dividends declared ($1.15 per common share)
(4,713)(4,713)
Share-based compensation1,720 1,720 
Other2 (8)(6)
Balance at April 29, 20234,075$43,639 $262 $(1,606)$42,295 


















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CISCO SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(in millions, except per-share amounts)
(Unaudited)
Three Months Ended April 30, 2022Shares of
Common
Stock		Common Stock
and
Additional
Paid-In Capital		Accumulated DeficitAccumulated
Other
Comprehensive Loss		Total
Equity
Balance at January 29, 20224,151 $42,291 $(2,006)$(789)$39,496 
Net income3,044 3,044 
Other comprehensive loss(674)(674)
Issuance of common stock7 — 
Repurchase of common stock(5)(47)(205)(252)
Shares repurchased for tax withholdings on vesting of restricted stock units and other(2)(135)(135)
Cash dividends declared ($0.38 per common share)
(1,555)(1,555)
Share-based compensation477 477 
Other(2)1 (2)(1)
Balance at April 30, 20224,149$42,587 $(724)$(1,463)$40,400 

Nine Months Ended April 30, 2022Shares of
Common
Stock		Common Stock
and
Additional
Paid-In Capital		Accumulated DeficitAccumulated
Other
Comprehensive Loss		Total
Equity
Balance at July 31, 20214,217 $42,346 $(654)$(417)$41,275 
Net income8,997 8,997 
Other comprehensive loss(1,046)(1,046)
Issuance of common stock36 306 306 
Repurchase of common stock(92)(929)(4,403)(5,332)
Shares repurchased for tax withholdings on vesting of restricted stock units and other(10)(546)(546)
Cash dividends declared ($1.12 per common share)
(4,657)(4,657)
Share-based compensation1,407 1,407 
Other(2)3 (7)(4)
Balance at April 30, 20224,149$42,587 $(724)$(1,463)$40,400 











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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.Organization and Basis of Presentation
The fiscal year for Cisco Systems, Inc. (the “Company,” “Cisco,” “we,” “us,” or “our”) is the 52 or 53 weeks ending on the last Saturday in July. Fiscal 2023 and fiscal 2022 are each 52-week fiscal years. The Consolidated Financial Statements include our accounts and those of our subsidiaries. All intercompany accounts and transactions have been eliminated. We conduct business globally and are primarily managed on a geographic basis in the following three geographic segments: the Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific, Japan, and China (APJC).
We have prepared the accompanying financial data as of April 29, 2023 and for the third quarter and first nine months of fiscal 2023 and 2022, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. The July 30, 2022 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended July 30, 2022.
In the opinion of management, all normal recurring adjustments necessary to state fairly the consolidated balance sheet as of April 29, 2023, the results of operations, the statements of comprehensive income and the statements of equity for the third quarter and first nine months of fiscal 2023 and 2022, and the statements of cash flows for the first nine months of fiscal 2023 and 2022, as applicable, have been made. The results of operations for the third quarter and first nine months of fiscal 2023 are not necessarily indicative of the operating results for the full fiscal year or any future periods.
Our consolidated financial statements include our accounts and investments consolidated under the voting interest model. The noncontrolling interests attributed to these investments are not presented as a separate component in the equity section of the Consolidated Balance Sheets as these amounts are not material for any of the fiscal periods presented. The share of earnings attributable to the noncontrolling interests are not presented separately in the Consolidated Statements of Operations as these amounts are not material for any of the fiscal periods presented.
Certain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation. We have evaluated subsequent events through the date that the financial statements were issued.

2.Recent Accounting Pronouncements
(a)Recent Accounting Standards or Updates Not Yet Effective
Reference Rate Reform In March 2020, the Financial Accounting Standards Board issued an accounting standard update and subsequent amendments that provide optional expedients and exceptions to the current guidance on contract modification and hedging relationships to ease the financial reporting burden of the expected market transition from the London InterBank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This accounting standard update was effective upon issuance and may be applied prospectively through December 31, 2024. We do not expect this accounting standard update will have a material impact on our Consolidated Financial Statements.

3.Revenue
We enter into contracts with customers that can include various combinations of products and services which are generally distinct and accounted for as separate performance obligations. As a result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. We classify our hardware, perpetual software licenses, and software-as-a-service (SaaS) as distinct performance obligations. Term software licenses represent multiple obligations, which include software licenses and software maintenance. In transactions where we deliver hardware or software, we are typically the principal and we record revenue and costs of goods sold on a gross basis. We refer to our term software licenses, security software licenses, SaaS, and associated service arrangements as subscription offers.
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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

We recognize revenue upon transfer of control of promised goods or services in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment, electronic delivery (or when the software is available for download by the customer), or once title and risk of loss has transferred to the customer. Transfer of control can also occur over time for software maintenance and services as the customer receives the benefit over the contract term. Our hardware and perpetual software licenses are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses include multiple performance obligations where the term licenses are recognized upfront upon transfer of control, with the associated software maintenance revenue recognized ratably over the contract term as services and software updates are provided. SaaS arrangements do not include the right for the customer to take possession of the software during the term, and therefore have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term as the customer consumes the services. On our product sales, we record consideration from shipping and handling on a gross basis within net product sales. We record our revenue net of any associated sales taxes.
An allowance for future sales returns is established based on historical trends in product return rates. The allowance for future sales returns as of April 29, 2023 and July 30, 2022 was $38 million and $43 million, respectively, and was recorded as a reduction of our accounts receivable and revenue.
Significant Judgments
Revenue is allocated among these performance obligations in a manner that reflects the consideration that we expect to be entitled to for the promised goods or services based on standalone selling prices (SSP). SSP is estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of a product or service when we sell the goods separately in similar circumstances and to similar customers. In instances where SSP is not directly observable, we determine SSP using information that may include market conditions and other observable inputs.
We assess relevant contractual terms in our customer contracts to determine the transaction price. We apply judgment in identifying contractual terms and determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. Variable consideration includes potential contractual penalties and various rebate, cooperative marketing and other incentive programs that we offer to our distributors, channel partners and customers. When determining the amount of revenue to recognize, we estimate the expected usage of these programs, applying the expected value or most likely estimate and update the estimate at each reporting period as actual utilization becomes available. We also consider the customers’ right of return in determining the transaction price, where applicable.
We assess certain software licenses, such as for security software, that contain critical updates or upgrades which customers can download throughout the contract term. Without these updates or upgrades, the functionality of the software would diminish over a relatively short time period. These updates or upgrades provide the customer the full functionality of the purchased security software licenses and are required to maintain the security license’s utility as the risks and threats in the environment are rapidly changing. In these circumstances, the revenue from these software arrangements is recognized as a single performance obligation satisfied over the contract term.
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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


(a)Disaggregation of Revenue
We disaggregate our revenue into groups of similar products and services that depict the nature, amount, and timing of revenue and cash flows for our various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies differ for each of our product categories, resulting in different economic risk profiles for each category. The following table presents this disaggregation of revenue (in millions):
Three Months EndedNine Months Ended
April 29,
2023		April 30,
2022		April 29, 2023April 30, 2022
Product revenue:
Secure, Agile Networks$7,550 $5,870 $20,980 $17,737 
Internet for the Future1,392 1,324 4,007 4,019 
Collaboration985 1,132 3,029 3,308 
End-to-End Security958 938 2,872 2,716 
Optimized Application Experiences204 183 597 544 
Other Products3 2 7 7 
Total Product11,092 9,448 31,492 28,330 
Services3,479 3,387 10,303 10,125 
Total$14,571 $12,835 $41,795 $38,455 
Amounts may not sum due to rounding. We have made certain reclassifications to the product revenue amounts for prior periods to conform to the current year presentation.
Secure, Agile Networks consists of our core networking technologies of switching, enterprise routing, wireless, and compute products. These technologies consist of both hardware and software offerings, including software licenses and SaaS, that help our customers build networks, automate, orchestrate, integrate, and digitize data. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
Internet for the Future consists of our routed optical networking, 5G, silicon, and optics solutions. These products consist primarily of both hardware and software offerings, including software licenses and SaaS. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
Collaboration consists of our Meetings, Collaboration Devices, Calling, Contact Center and Communication Platform as a Service (CPaaS) offerings. These products consist primarily of software offerings, including software licenses and SaaS, as well as hardware. Our perpetual software and hardware in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
End-to-End Security consists of our Network Security, Cloud Security, Security Endpoints, Unified Threat Management and Zero Trust offerings. These products consist of both hardware and software offerings, including software licenses and SaaS. Updates and upgrades for the term software licenses are critical for our software to perform its intended commercial purpose because of the continuous need for our software to secure our customers’ network environments against frequent threats. Therefore, security software licenses are generally represented by a single distinct performance obligation with revenue recognized ratably over the contract term. Our hardware and perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

Optimized Application Experiences consists of our full stack observability and cloud-native platform offerings. These products consist primarily of software offerings, including software licenses and SaaS. Our perpetual software in this category are distinct performance obligations where revenue is recognized upfront upon transfer of control. Term software licenses are multiple performance obligations where the term license is recognized upfront upon transfer of control with the associated software maintenance revenue recognized ratably over the contract term. SaaS arrangements in this category have one distinct performance obligation which is satisfied over time with revenue recognized ratably over the contract term.
In addition to our product offerings, we provide a broad range of service and support options for our customers, including technical support services and advanced services. Technical support services represent the majority of these offerings which are distinct performance obligations that are satisfied over time with revenue recognized ratably over the contract term. Advanced services are distinct performance obligations that are satisfied over time with revenue recognized as services are delivered.
The sales arrangements as discussed above are typically made pursuant to customer purchase orders based on master purchase or partner agreements. Cash is received based on our standard payment terms which is typically 30 days. We provide financing arrangements to customers for all of our hardware, software and service offerings. Refer to Note 9 for additional information. For these arrangements, cash is typically received over time.
(b)Contract Balances
Accounts Receivable
Accounts receivable, net was $5.1 billion as of April 29, 2023 compared to $6.6 billion as of July 30, 2022, as reported on the Consolidated Balance Sheets.
The allowances for credit loss for our accounts receivable are summarized as follows (in millions):
Three Months EndedNine Months Ended
April 29, 2023April 30, 2022April 29, 2023April 30, 2022
Allowance for credit loss at beginning of period$86 $70 $83 $109 
Provisions (benefits)9 17 23 53 
Recoveries (write-offs), net(12)(9)(23)(75)
Foreign exchange and other— — — (9)
Allowance for credit loss at end of period$83 $78 $83 $78 
Contract Assets and Liabilities
Gross contract assets by our internal risk ratings are summarized as follows (in millions):
April 29,
2023		July 30,
2022
1 to 4$456 $414 
5 to 6933 814 
7 and Higher71 158 
Total$1,460 $1,386 
Contract assets consist of unbilled receivables and are recorded when revenue is recognized in advance of scheduled billings to our customers. These amounts are primarily related to software and service arrangements where transfer of control has occurred but we have not yet invoiced. Our contract assets for these unbilled receivables, net of allowances, was $1.4 billion as of April 29, 2023 and $1.3 billion as of July 30, 2022, and were included in other current assets and other assets.
Contract liabilities consist of deferred revenue. Deferred revenue was $24.3 billion as of April 29, 2023 compared to $23.3 billion as of July 30, 2022. We recognized approximately $2.7 billion and $10.6 billion of revenue during the third quarter and first nine months of fiscal 2023, respectively, that was included in the deferred revenue balance at July 30, 2022.
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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

(c)Capitalized Contract Acquisition Costs
We capitalize direct and incremental costs incurred to acquire contracts, primarily sales commissions, for which the associated revenue is expected to be recognized in future periods. We incur these costs in connection with both initial contracts and renewals. These costs are initially deferred and typically amortized over the term of the customer contract which corresponds to the period of benefit. Deferred sales commissions were $1.0 billion as of each of April 29, 2023 and July 30, 2022, and were included in other current assets and other assets. The amortization expense associated with these costs was $172 million and $549 million for the third quarter and first nine months of fiscal 2023, respectively, and $175 million and $492 million for the corresponding periods of fiscal 2022, respectively, and was included in sales and marketing expenses.


4.Acquisitions and Divestitures
We completed two acquisitions during the first nine months of fiscal 2023. A summary of the allocation of the total purchase consideration is presented as follows (in millions):
Purchase ConsiderationNet Tangible Assets Acquired (Liabilities Assumed)Purchased Intangible AssetsGoodwill
Total acquisitions (two in total)
$96 $(7)$56 $47 
The total purchase consideration related to our acquisitions completed during the first nine months of fiscal 2023 consisted of cash consideration. Total transaction costs related to acquisition and divestiture activities were $6 million and $44 million for the first nine months of fiscal 2023 and 2022, respectively. These transaction costs were expensed as incurred in general and administrative expenses (“G&A”) in the Consolidated Statements of Operations.
The goodwill generated from acquisitions completed during the first nine months of fiscal 2023 is primarily related to expected synergies. The goodwill is generally not deductible for income tax purposes.
The Consolidated Financial Statements include the operating results of each acquisition from the date of acquisition. Pro forma results of operations and the revenue and net income subsequent to the acquisition date for the acquisitions completed during the first nine months of fiscal 2023 have not been presented because the effects of the acquisition were not material to our financial results.

5.Goodwill and Purchased Intangible Assets
(a)Goodwill
The following table presents the goodwill allocated to our reportable segments as of April 29, 2023 and during the first nine months of fiscal 2023 (in millions):
Balance at July 30, 2022Acquisitions & DivestituresForeign Currency Translation and OtherBalance at April 29, 2023
Americas$23,882 $31 $11 $23,924 
EMEA9,062 11 4 9,077 
APJC5,360 5 3 5,368 
Total$38,304 $47 $18 $38,369 
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CISCO SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

(b)Purchased Intangible Assets
The following table presents details of our intangible assets acquired through acquisitions completed during the first nine months of fiscal 2023 (in millions, except years):
 FINITE LIVESINDEFINITE LIVESTOTAL
 TECHNOLOGYCUSTOMER
RELATIONSHIPS		OTHERIPR&D
Weighted-
Average Useful
Life (in Years)		AmountWeighted-
Average Useful
Life (in Years)		AmountWeighted-
Average Useful
Life (in Years)		AmountAmountAmount
Total acquisitions (two in total)
4.0$